Altice USA executives expressed optimism new builds and network upgrades would help it juice broadband subscriber growth in the back half of 2021 and into 2022, after a jump in churn left it with almost no gains in Q2.
Broadband subscriber growth was flat in the quarter, with the company adding just 200 organic net customer additions compared to 70,400 in Q2 2020.
On an earnings call, Altice USA CEO Dexter Goei attributed the stagnation to “elevated move churn,” a “disproportionate” amount of which was within its Optimum brand footprint. Analysts at Raymond James speculated that “many of the net adds Altice successfully wooed during the pandemic as NYC residents flocked to the suburbs are now leaving by the same token as they move right back to the city again, if not away from the area altogether.”
Goei noted that “without the impact of elevated move churn and pandemic programs and storms, we would have been at plus 21,000 data net adds and plus 7,000 customer relationships for the quarter.” The executive added that in “2022 and onwards, we expect to see much more elevated levels of broadband net adds” as it reaps the benefit of ongoing fiber expansion efforts.
In its earnings report, Altice noted more than half of its broadband customers are still taking speed tiers offering 200 Mbps or less and only 11.3% of its customer base currently takes gigabit service. This, it argued, provides a “sizable” opportunity for upselling.
But MoffettNathanson analysts warned service pricing could prove a hurdle to Altice’s growth ambitions. They noted its lack of subscriber growth in a quarter buoyed by federal stimulus spending and broadband subsidies “will only exacerbate concerns about pricing.”
“Despite having the most competitive footprint in all of Cable, Altice’s prices are nevertheless the highest in all of Cable, and, worse, they are rising faster than peers’,” they wrote.
Consolidated revenue of $2.52 billion was up 1.7% year-on-year, with net income rising to $197.7 million from $111.3 million in the year-ago period. Broadband revenue grew 7.8% to $ 992.2 million.